BILL NUMBER: SB 1759	CHAPTERED  09/23/00

	CHAPTER   586
	FILED WITH SECRETARY OF STATE   SEPTEMBER 23, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 22, 2000
	PASSED THE SENATE   AUGUST 31, 2000
	PASSED THE ASSEMBLY   AUGUST 31, 2000
	AMENDED IN ASSEMBLY   AUGUST 30, 2000
	AMENDED IN SENATE   MAY 23, 2000
	AMENDED IN SENATE   APRIL 25, 2000

INTRODUCED BY   Senator Lewis

                        FEBRUARY 23, 2000

   An act to amend Section 41365 of, and to add Sections 41366.5,
41366.7, and 41367 to, the Education Code, relating to charter
schools.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1759, Lewis.  Charter School Revolving Loan Fund:  defaults:
interest payments.
   Existing law establishes the Charter School Revolving Loan Fund
and requires, if a charter school defaults on a loan from the fund,
the chartering authority also to be liable for repayment of the loan.

   This bill would instead require the charter school to be solely
liable.
   The bill would require moneys in the fund to be loaned at the
interest rate earned by the money in the Pooled Money Investment
Account as of the date of disbursement of the funds to the charter
school, and would require interest payments to be paid into the
Charter School Security Fund, which would be established by the bill.
  The bill would require moneys in the Charter School Security Fund
to be available for deposit into the Charter School Revolving Loan
Fund in case of default on any loan made from the Charter School
Revolving Loan Fund.  This bill would also require the Director of
Finance to monitor the adequacy of the fund and report annually to
the Legislature on the need, if any, to adjust the interest rate for
loans from the fund or to revise any other aspect of the default
recovery plan.
   The bill would incorporate additional changes in Section 41365 of
the Education Code proposed by SB 1728, that would become operative
only if SB 1728 and this bill are both chaptered and become effective
on or before January 1, 2001, and this bill is chaptered last.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 41365 of the Education Code is amended to read:

   41365.  (a) The Charter School Revolving Loan Fund is hereby
created in the State Treasury.  The Charter School Revolving Loan
Fund shall be comprised of federal funds obtained by the state for
charter schools and any other funds appropriated or transferred to
the fund through the annual budget process.  Funds appropriated to
the Charter School Revolving Loan Fund shall remain available for the
purposes of the fund until reappropriated or reverted by the
Legislature through the annual Budget Act or any other act.
   (b) Loans may be made from moneys in the Charter School Revolving
Loan Fund to a chartering authority for charter schools that are not
a conversion of an existing school, or directly to a charter school
that qualifies to receive funding pursuant to Chapter 6 (commencing
with Section 47630) that is not a conversion of an existing school,
upon application of a chartering authority or charter school and
approval by the Superintendent of Public Instruction.  A loan is for
use by the charter school during the period from the date the charter
is granted pursuant to Section 47605 to the end of the fiscal year
in which the charter school first enrolls pupils.  Money loaned to a
chartering authority for a charter school, or to a charter school,
pursuant to this section shall be used only to meet the purposes of
the charter granted pursuant to Section 47605.  The loan to a
chartering authority for a charter school, or to a charter school,
pursuant to this subdivision shall not exceed two hundred fifty
thousand dollars ($250,000).  This subdivision does not apply to a
charter school that obtains renewal of a charter pursuant to Section
47607.
   (c) Commencing with the first fiscal year following the fiscal
year the charter school first enrolls pupils, the Controller shall
deduct from apportionments made to the chartering authority or
charter school, as appropriate, an amount equal to the annual
repayment of the amount loaned to the chartering authority or charter
school for the charter school under this section and pay the same
amount into the Charter School Revolving Loan Fund in the State
Treasury.  Repayment of the full amount loaned to the chartering
authority shall be deducted by the Controller in equal annual amounts
over a number of years agreed upon between the loan recipient and
the State Department of Education, not to exceed five years for any
loan.
   (d) (1) Notwithstanding other provisions of law, a loan may be
made directly to a charter school pursuant to this section only in
the case of a charter school that is incorporated.
   (2) Notwithstanding other provisions of law, in the case of
default of a loan made directly to a charter school pursuant to this
section, the charter school shall be solely liable for repayment of
the loan.
  SEC. 1.5.  Section 41365 of the Education Code is amended to read:

   41365.  (a) The Charter School Revolving Loan Fund is hereby
created in the State Treasury.  The Charter School Revolving Loan
Fund shall be comprised of federal funds obtained by the state for
charter schools and any other funds appropriated or transferred to
the fund through the annual budget process.  Funds appropriated to
the Charter School Revolving Loan Fund shall remain available for the
purposes of the fund until reappropriated or reverted by the
Legislature through the annual Budget Act or any other act.
   (b) Loans may be made from moneys in the Charter School Revolving
Loan Fund to a chartering authority for charter schools that are not
a conversion of an existing school, or directly to a charter school
that qualifies to receive funding pursuant to Chapter 6 (commencing
with Section 47630) that is not a conversion of an existing school,
upon application of a chartering authority or charter school and
approval by the Superintendent of Public Instruction.  Money loaned
to a chartering authority for a charter school, or to a charter
school, pursuant to this section shall be used only to meet the
purposes of the charter granted pursuant to Section 47605.  The loan
to a chartering authority for a charter school, or to a charter
school, pursuant to this subdivision shall not exceed two hundred
fifty thousand dollars ($250,000) over the lifetime of the charter
school.  A charter school may receive money obtained from multiple
loans made directly to the charter school or to the school's
chartering authority from the Charter School Revolving Loan Fund, as
long as the total amount received from the fund over the lifetime of
the charter school does not exceed two hundred fifty thousand dollars
($250,000).  This subdivision does not apply to a charter school
that obtains renewal of a charter pursuant to Section 47607.
   (c) The Superintendent of Public Instruction may consider all of
the following when making a determination as to the approval of a
charter school's loan application:
   (1) Soundness of the financial business plans of the applicant
charter school.
   (2) Availability of the charter school of other sources of
funding.
   (3) Geographic distribution of loans made from the Charter School
Revolving Loan Fund.
   (4) The impact that receipt of funds received pursuant to this
section will have on the charter school's receipt of other private
and public financing.
   (5) Plans for creative uses of the funds received pursuant to this
section, such as loan guarantees or other types of credit
enhancements.
   (6) The financial needs of the charter school.
   (d) Priority for loans from the Charter School Revolving Loan Fund
shall be given to new charter schools for startup costs.
   (e) Commencing with the first fiscal year following the fiscal
year the charter school receives the loan, the Controller shall
deduct from apportionments made to the chartering authority or
charter school, as appropriate, an amount equal to the annual
repayment of the amount loaned to the chartering authority or charter
school for the charter school under this section and pay the same
amount into the Charter School Revolving Loan Fund in the State
Treasury.  Repayment of the full amount loaned to the chartering
authority shall be deducted by the Controller in equal annual amounts
over a number of years agreed upon between the loan recipient and
the State Department of Education, not to exceed five years for any
loan.
   (f) (1) Notwithstanding other provisions of law, a loan may be
made directly to a charter school pursuant to this section only in
the case of a charter school that is incorporated.
   (2) Notwithstanding other provisions of law, in the case of
default of a loan made directly to a charter school pursuant to this
section, the charter school shall be solely liable for repayment of
the loan.
  SEC. 2.  Section 41366.5 is added to the Education Code, to read:
   41366.5.  (a) Moneys in the Charter School Revolving Loan Fund
shall be loaned at the interest rate earned by the money in the
Pooled Money Investment Account as of the date of disbursement of the
funds to the charter school.
   (b) A charter school shall pay the interest on any loan from the
fund in regular installments withdrawn from the annual apportionment
the charter school receives.
   (c) All interest payments shall be paid into the Charter School
Security Fund established pursuant to Section 41367.
  SEC. 3.  Section 41366.7 is added to the Education Code, to read:
   41366.7.  The Director of Finance shall monitor the adequacy of
the amount of funds in the Charter School Security Fund and report
annually to the Legislature on the need, if any, to adjust the
interest rate set forth in Section 41366.5 or to revise any other
aspect of the default recovery plan.
  SEC. 4.  Section 41367 is added to the Education Code, to read:
   41367.  (a) The Charter School Security Fund is hereby created in
the State Treasury.
   (b) Moneys in the fund shall be available for deposit into the
Charter School Revolving Loan Fund in case of default on any loan
made from the Charter School Revolving Loan Fund.
  SEC. 5.  Section 1.5 of this bill incorporates amendments to
Section 41365 of the Education Code proposed by both this bill and SB
1728.  It shall only become operative if (1) both bills are enacted
and become effective on or before January 1, 2001, (2) each bill
amends Section 41365 of the Education Code, and (3) this bill is
enacted after SB 1728, in which case Section 1 of this bill shall not
become operative.
